2016 (12) TMI 1754 - HC - VAT and Sales Tax

Penalty u/s 27(3) of TNVAT Act - suppression of facts or not - Held that - In terms of the said provision to levy penalty the Assessing Officer should record his satisfaction that escapement of tax was due to willful non-disclosure. Mere non-disclosure does not automatically lead to levy of penalty. The statute contemplates levy of penalty in cases of willful non-disclosure. Therefore, the petitioner s conduct in paying the tax at the time of inspection prior to issuance of show cause notice can be taken into consideration. The matter is remanded to the respondent for fresh consideration who shall take note of the conduct of the petitioner in remitting tax even prior to the issuance of show cause notice dated 18.08.2016 and 31.05.2016 respectively - petition allowed by way of remand.

Summary

Issues:
Challenging orders of assessment on penalty and equal time addition under Section 27(3) of TNVAT Act.

Analysis:

1. Imposition of Penalty:
The petitioner challenged the assessment orders regarding the imposition of penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act (TNVAT Act). The court noted that for the levy of penalty, the Assessing Officer must be satisfied that the escapement of tax was due to willful non-disclosure. Mere non-disclosure does not automatically lead to the imposition of a penalty. The statute allows for the levy of a penalty in cases of willful non-disclosure. The court considered the petitioner's conduct of paying the tax at the time of inspection before the show cause notice was issued. The court held that this conduct should be taken into account, indicating that the assessment should be re-done on this aspect.

2. Equal Time Addition:
The petitioner also challenged the assessment orders concerning equal time addition. The court emphasized that assessment should be re-done on this aspect as well. The court directed the respondent to consider the conduct of the petitioner in remitting tax even before the issuance of show cause notices. The court instructed the respondent to reconsider both the issues of penalty levy and equal time addition and pass fresh orders in accordance with the law.

3. Judgment Outcome:
In conclusion, the High Court allowed the writ petitions, set aside the impugned orders of assessment, and remanded the matter to the respondent for fresh consideration. The court directed the respondent to take into account the petitioner's conduct of remitting tax before the show cause notices were issued and to reevaluate the issues of penalty levy and equal time addition. The court ordered fresh orders to be passed in accordance with the law, without imposing any costs. The connected miscellaneous petitions were closed as a result of the judgment.